paying (or not) accrued sick leave upon termination

atrimble

For Missouri Employers, specifically, but anyone else can chime in, too!

We state in our personnel policy (and it hasn't changed in 20+ years) that we do not pay sick leave upon termination, though we do pay out unused annual leave. However, we have a long-time terminating employee who has stated he will take us to court in order to get his 960 hours (max accrual) of accrued sick leave (cash value of ~$23,000).

I believe that if this proceeds to court, we have a better than 50% chance of having to pay out this leave. I have told the CEO and other administrators that the Missouri court system in recent years has taken to looking at Paid Time Off, in whatever form, as an inalienable property. I don't remember who I heard it from or where I saw it, but it sure sank home. I have therefore suggested to the Board that they change their policy to reflect the times. But if I have to go up in front of them, I'd like to be able to quote from one of these court cases' decision(s).

Can anyone provide a citation for me, or at least recommend a tool for me to go find the info (hopefully on the Internet)? I've been searching all morning on the State website, and uncovered all kinds of interesting but unrelated information. I meet with our employment attorney tomorrow a.m., and would like to go in somewhat informed.

jmcaa

By unused annual leave, I'm assuming that would be vacation pay? As long as you distinguish the difference between the vacation pay and the sick leave, circumstances in which it can be used and paid out, circumstances on what happens to it when employment is terminated, I don't see where you have a problem.

Do you provide an employee handbook that states these policies? If so, do you require the employee to return a signed sheet saying they received it? If so, then I would let him know that you provided this information to him, that your company legally does not even have to provide any type of paid time off, and that the sick leave will not be paid as per your company policy.

As long as you have not paid it for any other terminating employee, you should be on safe ground.

If I'm wrong somebody please straighten me out.

atrimble

Yes, annual leave is the same as vacation, mostly. We don't consider time off to meet with your accountant or to take your car to the shop as a true rest-and-relaxation vacation, though, so we lump it all together and call it Annual.

We do have a Personnel Policy, and I do have a signed receipt for this employee for the latest version, which differentiates what Annual and Sick Leave is, and also specifies that Sick Leave is not paid upon termination.

However, the semantics of our policy may be used against us. The word "accrue" is based on earning the right to something, and we apply the word to both Annual and Sick Leave. Merriam-Webster, who is usually one of my best tools, may end up hurting us in the long run. "Accrue: to come into existence as a legally enforceable claim, to come as a direct result of some state or action; to accumulate or be added periodically; to accumulate or have due after a period of time ." And, unfortunately, we "periodically accrue" sick leave - each employee accrues 8 hours per month, and it appears on their paychecks.

Plus, we have made one exception to the no payout on termination rule in the past couple of years (having to do with a prolonged work comp case, and upon our attorney's recommendation), and this currently terminating employee was intimately involved in the prior exception case. AND he has pointedly mentioned the ex-employee's name a couple of times since he's given notice of resignation, always with a "what's mine is mine" type of comment.

Dutch2

Ouch, a recent exception to the rule...

We have basically the same program just a few miles east of you here in Missouri. We have a seperate vacation and sick time program for our ee's. We do pay out unused vacation at termination but we have NEVER paid out unused sick time to an ee that terminates for any reason. We allow our ee's to accmulate up to 30 days (240 hrs) of sick time.
Please keep us posted as to how this turns out.
I will double check the wording in our handbook today.
Good luck...
Dutch2

E Wart

You may want to be careful. I understand that there is a new federal court ruling on overtime for sick pay out at termination. You might get hit there as well. (Something with a firefighter I think.)
E Wart

atrimble

Resolution: our attorney says, "Don't worry about it." Even though the organization of the subsections of our Sick Leave policy may leave something to be desired, everything necessary to defend our position is in there. The attorney did suggest giving the employee 60-90 days after termination before moving a couple of sentences for clarity (like moving "no payout upon termination" from the Reinstatement section to the Accumulation section). The attorney's main concern was how similar or different this employee's demographics were to the one we did pay out and to other recent terminations, in case he decides to cry discrimination. We also reviewed whether the policy specifically states that nothing implies a property right (it does so state) and that nothing in the policy creates or constitutes a contract (ditto). The attorney basically said that it is unlikely that this employee could bring a case, but if he does, we're covered.

So, we'll have to wait to see if we have to pay him sick leave, but we're breathing a little easier for the time being.